In a series of articles published yesterday morning, South China Morning Post continues to expose one of Hong Kong’s biggest financial scandals of the past two decades, while putting legislators and regulators in the hot seat:
These articles explain how predatory “advisers” are using the so-called “insurance wrapper” of ILAS products to shield themselves from the normal rules and scrutiny of the SFC. They are thus able to flog unauthorized and potentially toxic funds by packaging them inside ripoff ILAS products. This practice is so common that the industry even has a name for it: “double dipping”. The term is a reference to the fact that advisers are secretly dipping into their clients’ pockets twice via large kickbacks (i.e., commissions) from both ILAS issuers and fund issuers.
Apparently, when asked to comment on this regulatory fiasco, Sin Chung-kai, chairman of the legislative committee responsible for the Securities and Futures Bill, basically admitted that the regulation of “insurance-linked investments” is flawed, that it has resulted in widespread exploitation of retail investors, and that the government needs to address this issue immediately by rewriting the relevant laws.
It’s about time that someone from LegCo has finally stepped up and acknowledged the truth.
The reporters and editors responsible for SCMP’s persistent coverage of ILAS deserve high praise. No other news organization has had the courage to hold regulators, legislators, and the vermin in the self-regulated insurance industry accountable.